There have been several attempt at merging the iPod and the mobile phone but each has so many compromises that most people end up going back to carrying two devices. There's no question that the next big breakthrough in mobile technology will be the hybrid mobile phone/music player, and frankly, it's Apple's game to lose.
Apple expects to ship more than 52 million iPods worldwide by the end of 2006 and is clearly the de facto standard in portable music players with an enviable 70+ percent of the market. The problem for Apple is that there are more than 2.2 billion mobile phones in use worldwide and if people have to chose one or the other, people will chose the mobile phone every time.
No wonder there's been so much speculation about Apple releasing a hybrid iPhone, if they don't they're going to get their lunch eaten. If pressure from the Sony Ericsson w700i (which now plays AAC files) wasn't enough, along comes mOcean. This US$20 application for the Palm OS from Motion Apps morphs your palmOne Treo into a pseudo-iPod. Just check out the interface...
It's not perfect though (here come those compromises that I mentioned): DRM protected files cannot be played, .aac and .ogg can only be played only when transferred using the iTunes conduit and the conduit only works with iTunes 6 or later for Windows XP. The Mac conduit is expected soon.